Thursday, January 27, 2011

Slaying the beasts

Back in the nineteen seventies, Britain was a country with a strong manufacturing sector that dominated our economy. Unfortunately, we also had very powerful unions and this created serious problems for the various governments of the time. The power of the unions meant that management - particularly the weak management in nationalised industries - were unable to bring in new technology or working practices that would improve productivity and/or quality.

This resulted in that decade being marked by over the top demands for pay rises, shorter hours, longer holidays and frequent, prolonged and very damaging strikes in all sectors of manufacturing/production. The nationalised industries and the power of the unions represented a beast created by Labour policy which the Tories under Thatcher, on coming to power in 1979, were determined to slay.

They had a plan and slay it they did. Unfortunately, in killing the beast of too powerful unions and nationalised industry, they also struck the coup de grace for manufacturing/production. This was not accidental - as I said, the Tories had a plan.

Their plan was to switch Britain from a manufacturing/production led economy to a service based economy - and financial services in particular. It was the perfect solution - a stable, conservative industry, solid and dependable with little or no union ties. A loose monetary policy followed allowing an expansion of easy credit and the de-regulation of the financial services industry. The "Big Bang" of 1986 led to a huge expansion of this industry, the rise of the "yuppie" yelling "buy, buy" into his brick of a mobile phone and the "greed is good" generation.

Pretty soon Britain had moved from a primarily manufacturing based economy to a service based economy - the Labour beast of trade union power was dead and the future looked rosy. Unfortunately, there was a flaw to the plan. A service based economy requires something to service and the market in Britain is very very limited for such services. Take out a huge chunk of that market - in the shape of productive industry - and the service industry will have to look elsewhere for business if it is to expand and meet the demands asked of it.

Never fear - something came along that enabled this expansion. The rise of interconnected computer technology and, in particular, the Internet. This meant that financial transactions could be conducted from anywhere to anywhere. You didn't need to be in Hong Kong to buy a business in Hong Kong. Globalisation was born - again.

The trouble was, it was hard to compete against the massive foreign financial companies in a global market. So British financial industries had to become bigger and more powerful - so they started gobbling up one another and then started to gobble up whatever they could abroad - and, unfortunately for us, it also meant that foreign companies could equally gobble up our companies.

This had the opposite effect from that intended. Instead of making the industry more competitive it made it less so. Instead of there being hundreds of banks and building societies to entrust your money to there were less and less as more and more were taken over by the giants of the industry.

Ultimately, in slaying the Labour beast of trade union power, the Tories had created one of their own - bank power. Only this was even more powerful, more demanding and even less controllable. While the unions only had power in Britain, the banks had tentacles that reached all over the world - it was impossible to impose regulation on an industry which could just decamp to another part of the world where the regulation was less stringent and yet still retain its influence and share of the market in the UK.

The solid, conservative, safe and dependable industry that had been the basis for their creation had turned into a ravenous, insatiable monster incapable of self-restraint and increasingly demanding as it became aware of its own awesome power.

The upshot of all this is that the beast created by the Tory Party has wreaked even more devastation and harm on Britain than that of the Labour Party. What is more, the Labour Party were utterly in awe of the beast; afraid to confront it and unable to slay it - and that task has now fallen to the Tory Party.

"I had desired it with an ardour that far exceeded moderation; but now that I had finished, the beauty of the dream vanished, and breathless horror and disgust filled my heart.”

The Frankenstein Tories must slay the monster they created.


Larry said...

But I think we can all agree that the problem was caused by the Left. The Tories had to do something. When faced with a problem, having a plan of attack is essential, so, yet again, the Tories have a plan (whether it be right or wrong) to tackle the deficit; Labour either deny there's a problem, or attack any plan Tories have for tackling it without positing an alternative plan.

On a side note, Stan, and off topic, if you didn't see Daily Politics today, check it out on BBC Iplayer. James Delingpole was debating Caroline Lucas, and he told it like it is - he called her a watermelon.

Stan said...

I certainly agree that the problem of union power was caused by the left and I definitely agree that something had to be done about that - but I also believe that throwing the baby out with the bath water by destroying our manufacturing base was unnecessary at best and disastrous at worst.

I don't think the Tories have a plan as such for tackling our economic problems either. Sure they plan not to spend quite so much more than we have as Labour were - but they have no plans to actually keep spending within their means.

There isn't any plan - none at all - to actually deal with the fundamental weaknesses of our economy.

Larry said...

I hate to admit it, but I fear you're right Stan.


That was the one criticism of Thatcher I had - how she got rid of the manufacturing base.

On a side note . . . you like your cars, Stan. Have you heard, there's a new Rover coming out very soon. It's Chinese owned, but I think there's quite a bit of British input.

Barnacle Bill said...

I think you have hit the nail on it's head with this proposition Stan.
However will the financial beast be slain by the rioters out on the streets, or will it be in a more gentlemanly manner?
I think the beast had better sit down and think this one thru.